Is the Affordable Care Act Falling Apart?

This week a Washington, DC Federal Appeals Court ruled that Americans who reside in states which operate under the Federal Health Exchanges could not be granted subsidies to health insurance premiums. Currently thirty six states have opted to have the Federal Government operate their exchanges as compared to State based insurance exchanges.

To back up a step.. When the Affordable Care Act was passed there were two types of insurance exchanges, The states were encouraged to set up their own exchanges, if they elected not to set up an exchange then the Federal Government would set up an exchange for them.

According to section 13.11 of the PPACA it empowers the IRS to subsidize premium when a State opens a State Based Insurance Exchange.

I was reading an article yesterday that stated this could result in a premium increase for nearly 8 million Americans who have purchased subsidized health insurance. That is kind of a distortion of the truth. They will pay more for their insurance, but the premium would remain the same. I will give you an example. I wrote a policy this week for a Chicago area client. By the way before the law their plan was around $400 for a family of three $5000 deductible Health Savings Account. We went to the Marketplace (Federal Exchange), the new plan had a family deductible of $12,700 and the premium was $701.48 per month. They qualified for a subsidy from the government based on their income of $518 per month so that brought THEIR COST down to $183.48. If they lost their subsidy the premium would not be going up, they would be paying the full premium.

I am quite certain the White House will appeal this decision and it will eventually end up in the United States Supreme Court.

This is the second time in less than 30 days that the Court has struck down parts of the health care law. On June 30th, the Supreme Court ruled in favor of Hobby Lobby that family owned corporations did not have to pay for insurance coverage for contraception that violated religious rights.